Just before the end of 2018, Altria -owner of the Marlboro brand in the
United States- announced its intentions to enter the legal cannabis industry
and invest more than 1.8 billion dollars in the Cronos Group, one of the
largest cannabis corporations in North America. With cigarette smoking in
decline across the continent and the recreational use of marijuana just
legalised in Canada, Altria’s most recent move illustrates the contrasting perspectives
of both industries.

But this giant investment into the legal marijuana business does not
come alone. In September 2018, Coca-Cola disclosed a series of plans and
meetings for a potential alliance with producers of CBD oil. In the United
Kingdom, Oxford Cannabinoid received an investment proposal from Imperial
Brands, one of the largest tobacco producers in the country. Meanwhile, Altria
experienced a fall of 20% on its shares over the year before the announcement
was made in December.

The Promising Future of Marijuana Businesses

Since Uruguay voted in favour of the legalisation of marijuana in 2013,
countries from all around the world have begun to question the long-lasting
politics of criminalisation which, in most cases, have failed to accomplish any
of their original goals. Canadian Prime Minister Justin Trudeau has actively
campaigned for the legalisation of marijuana usage both for medical and
recreational purposes, and in 2018 Canada officially became the world’s second
nation to legalise cannabis.

In the United States, the results of the midterm elections are promising
for cannabis activists and the legal marijuana industry. With Democrats taking
back control of the US Congress, the controversial Farm Bill might finally be
approved, opening the possibility of more CBD-based products being legally
allowed to enter the local market.

While legislation continues to change, companies in the tobacco and
alcoholic beverage sectors are expected to follow Altria’s path and invest into
research programs to enter the market and cover the enormous demand for cannabis
products.

A
Lucrative Survival Strategy

According to the United States Centre for Disease Control and
Prevention, tobacco consumption in the U.S. saw its lowest level on record in
2017. As scientific studies continue highlighting the negative effects of
cigarette smoking and governments keep pushing for higher taxes and stricter
regulations, tobacco companies must look for alternatives in the future.

A 2012 report by the University of California in
San Francisco concluded that marijuana usage does not increase the risk of
emphysema, and population studies have not been able to draw any correlation
between marijuana smoking and lung cancer.
On the other hand, the National Institutes of Health have come up with a list of medical uses for cannabis, while a study published by the American Medical
Association points out that smoking marijuana does not cause any harm to the
lungs and it might even improve their functioning.

Combining the demand for both legal and illegal marijuana, it is
estimated that this market is worth more than $52 billion in 2018. It seems
that companies in the declining tobacco industry, including Altria, might have
a good chance of becoming the new leaders of the promising marijuana sector.

Should
the Cannabis Industry be Run by Multinationals?

While many praise the arrival of big firms into the legal cannabis
industry, others seem sceptical about the impact that they could have in the
products and their quality. Currently, cannabis plants and derivates are mainly
produced by local farms and small businesses pushing for higher quality
extraction methods to remain ahead of the competition. The arrival of large,
established companies into the industry might change this scenario and turn the
focus of the business away from quality and into pure profit maximization. It
would certainly not be the first time it happens.

Many of those who oppose deals such as the one being planned by Altria
argue that, when a large company suddenly takes over a large share of the
market, the incentives for research, development and innovation decrease.
Mass-produced cannabis products would lower the overall market price,
discouraging small manufacturers from coming up with new methods and instead
forcing them to cut costs and sell cheaper.

The cannabis business is certainly booming in many parts of the globe
and the entrance of giants is arguably the only way to meet the increasing
demand. The question of whether this will take a toll on the overall quality
remains to be answered.